Foxwoods

Four Casino Licenses Awarded and Not One Brick LaidFoxwoods representatives presented their vision of a traffic plan that would be able to handle 12,000 to 28,000 vehicle trips per day. In fact, Foxwoods exclaimed the plan would be so good that traffic on the currently congested streets would be improved. In addition, effects on local businesses would be minimal. Why? Because casino employees would not want to hang around the casino at lunch time and they would go out and spend their money at area restaurants.

If you think that sounds like the Foxwoods presentation to Milford just a couple of months ago you would be wrong. This was 2008 and the city listening to the presentation was Philadelphia. Foxwoods had received a license to build and operate a casino in 2006.

The city of Philadelphia gave Foxwoods every opportunity to build a casino. Philadelphia even granted Foxwoods extra time to work out deals for financial assistance with Wynn casino and subsequently Harrah’s casino. Four years later, tired of Foxwoods’ inability to manage a large-scale construction project, the Pennsylvania Gaming Control Board voted 6-1 to revoke Foxwoods’ casino license.

The Philadelphia experience is not unique for Foxwoods. Foxwoods has also received licenses to build casinos in Kansas, California, and St. Croix, yet Foxwoods has failed to build one casino outside of Connecticut.

St. Croix TimelineJune 2005 – Foxwoods announces plans to build casino.[8]
June 2010 – Project still in permitting stage.[9]
March 2011 – Financing difficulties cited.[10]
June 2013 – Project now known as Amalago Bay still in permitting.

After reviewing many reports of the delays in permitting and need for financing, it appears Foxwoods withdrew from the project in 2011 or 2012.

Mall DelayIn February 2012 Foxwoods announced they would break ground on a retail shopping Mall attached to their casino in the spring of 2012. Ground breaking just occurred last month, one and a half years after their projection.

What should lead us to believe that Foxwoods will have completed a casino in Milford in less than four years after receiving the license as outlined in the contract?

Debt RestructuringFoxwoods recently restructured its debt to reduce its overall debt load from $2.3 billion to $1.7 billion. As part of the debt restructuring, Foxwoods told creditors who were owed $660 million that they would get new corporate notes for $220 million. The creditors were companies that loaned Foxwoods money, signed a contract, and have yet to see any money returned. One creditor that had loaned Foxwoods $35 million fought the restructuring and only received $9 million.[11]

Foxwoods CEO Scott Butera explained it like this, “What you have to do is convince them that $2.3 billion of debt is not worth $2.3 billion.”[12]

Foxwoods has promised Milford a “guaranteed” $31 million per year, yet Foxwoods’ financial history demonstrates a willingness to renege on its financial promises. Can Milford really count on Foxwoods?

Working Conditions and UnionsIn 2007 dealers at Foxwoods decided that working conditions had deteriorated to the point that they needed to join a union, thus becoming one of the first employee groups to ever organize at a tribal casino. Critical issues the employees were struggling with included the shrinking of their health benefits and the management’s reduction of their tips. Foxwoods petitioned the National Labor Review Board to stop dealers from organizing and holding elections, but the Labor Board allowed the elections to move forward. The tension between Foxwoods management and employees continues. Most recently Foxwoods refused to negotiate a new contract with employees, forcing them to work without a contract for two years. [13]

Following the election to allow the creation of a union, Foxwoods objected and cited certain tactics as having been unfair. In particular, Foxwoods complained that the ballots had not been printed in multiple languages. Foxwoods has stated on numerous occasions in Milford that all of its employees must speak English fluently. If that is truly the case, then why would union organizers need to accommodate speakers of other languages?

Foxwoods CT Is Suing Its Host TownThe Connecticut casinos are not obligated to pay taxes or mitigation amounts to their host communities because the casinos are on sovereign land and therefore required only to pay taxes to the state. Yet the towns must maintain roads to and throughout the Indian reservations, provide emergency services to the Tribe, bus children living on the reservations to school, and pay for the education of Tribal children.

The town of Montville successfully negotiated payments from Mohegan Sun to help cover the costs of town-provided services, but Foxwoods has refused to negotiate any similar payments to its host town of Ledyard.

To try to make up for the financial drain caused by Foxwoods, Ledyard levied a tax on the vendors that supply Foxwoods’ slot machines. Concerned that such a tax would set an unwelcome precedent, Foxwoods pressured the vendors to stop paying the tax, even though Foxwoods itself is not required to pay one dime.

In July 2008 Ledyard filed suit in Connecticut Superior Court to collect the unpaid taxes. After years of court delays, Ledyard won their case, but Foxwoods appealed, once again blocking the town from collecting tax revenue. The extended legal battle has cost the town of Ledyard over $1 million so far.[14]

Milford’s host community agreement with Foxwoods does not include penalties for nonperformance. The Suffolk Downs agreement, however, forces the developer to pay significant daily penalties, as much as $88,000 a day, for scheduled payment delays. If Foxwoods is financially unsuccessful due to an oversupply of casinos in New England and subsequently reneges on its agreement to pay all they promised, the Foxwoods Connecticut experience tells us they are unlikely to honor their agreement and be cooperative as a business partner. Our only option would be to sue Foxwoods for payment. How much money would that cost Milford taxpayers?

Foxwoods’ Financial Future in New England
Looks GrimFoxwoods has been losing money for the last six years straight because many of its customers are spending their gambling dollars in the newer casinos in New York and Rhode Island. A substantial chunk of Foxwoods’ current revenue stream comes from Massachusetts and Rhode Island residents. In fact, Massachusetts and Rhode Island residents account for 45 percent of Foxwoods’ customer base. When all four casinos open in Massachusetts, the Connecticut casinos will face even stiffer competition, and Foxwoods CT will likely suffer even greater revenue losses. How can Foxwoods CT continue to tackle its debt burden if its revenue drops substantially? And how will steep losses in Connecticut affect Foxwoods’ ability to maintain its financial obligations to Milford? Foxwoods does not have a sustainable business model for the northeast.

To print and share Carolyn Dykema’s letter to the Massachusetts Gaming Commission that outlines why Foxwoods is not a suitable business partner for Milford or any other town in Massachusetts, click here.